How to set up a Company in Malaysia

When you have an idea and start testing it with customers, you might wonder: should I start selling and working with customers as myself, or should I register a business?

Not many people realize how important it is to know what, why, and when to set up a business. In Malaysia (and Singapore), the first thing you should do is ask around. Don’t make assumptions or ignore this step. If you skip it, you might end up dealing with surprises from authorities like the Inland Revenue Board (IRB)/Lembaga Hasil Dalam Negeri (LHDN).

While you’re busy refining your idea, talking to customers, building a prototype, or finding a co-founder or partner, take some time to learn about business structures. Talk to others who’ve been through this process. You’ll find tips and advice that can save you a lot of money and trouble.

These days, you can search online or use AI tools for answers, but don’t trust everything you read. I suggest asking people who’ve done it before. If you have family or friends who are lawyers, accountants, or work in government, ask them for advice. It’s free, and they might even share tips you won’t find online.

In Malaysia, there are over 9 million registered businesses, including sole proprietors and partnerships. You can check these numbers on MyData SSM. For small businesses, registering as a sole proprietor or partnership is usually the quickest and cheapest option. You can do it yourself for less than RM100, and once you’re registered, you can open a bank account, issue invoices, and start accepting payments.

If you want to start a private company (Sdn. Bhd.), the process is different. You’ll usually need a licensed company secretary or lawyer to help you with the registration (though you can do it yourself on MyCOID if you know how). After registration, you must appoint a company secretary within 30 days, or you could face fines or lose the company. Keep in mind that hiring a company secretary will involve ongoing costs, so budget for that.

Once you have a company and a secretary, you’ll need to follow the Companies Act 2016 in Malaysia. Your secretary will handle tasks like preparing resolutions to open a bank account, register with government agencies, apply for grants, or buy assets. These services often come with extra fees, so be ready to pay for them.

Note:

When choosing a company secretary, be careful. Some will try to sell you unnecessary services to make you spend more. Ask clear questions, and see if they’re straightforward and honest. You’ll usually know by how they answer.

Thanks to Abu Musa and Shukri Yusof for reviewing the drafts.